DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Smt M. L . Kameshwari
Designation : senior Lecturer in CCP
Institute : Govt. Poly. For women,
Bheempunipatnam
Semester : VI Semester
Subject : Banking—II
Sub-Code : CCP-604(B)
Topic : Role of Non –Banking,
financial institution (11 to 12/18)
Duration : 50 minutes
Sub Topic : Prudential Norms of NBFC
Teaching Aids : PPT

CCP604(B). 65 to 66 1
Objectives

On completion of this period you would

be able to :

Explain the prudential norms of NBFC

CCP604(B). 65 to 66 2
Recap:

In the last class we have discussed

about :

 The Supervisory and Regulatory framework

of NBFC

CCP604(B). 65 to 66 3
Prudential Norms

Capital adequacy :
 Minimum capital requirement raised from
present level of Rs.25 lakhs to Rs. 2 crores
 Existing limits on deposit acceptance may be
continued

Income recognition :
 Income recognition on the Non Performing
Assets (NPA) is allowed on cash basis only

CCP604(B). 65 to 66 4
Prudential Norms…

 Asset classification
 All assets should be classified
 Provision for bad and doubtful debts

Exposure norms :
 Norms are tightened to ensure prevention of
deployment of public deposits in high risk and
speculative avenues

CCP604(B). 65 to 66 5
Prudential Norms…

NPA norms :
 Loans and advances up to 6 months and 30
days respectively
 Lease and hire purchase Finance : 2
months

Restrictive norms :
 Loans against own shares not allowed

CCP604(B). 65 to 66 6
Prudential Norms…
Accounting standards :
 Accounting standards issued by Institute of
Chartered Accountants of India should be
strictly followed

Accounting for investment :

 Clear cut guidelines for accounting in respect
of investments such as:
 Long term, short term or current investments

CCP604(B). 65 to 66 7
Summary

In this class we discussed about the

 Prudential norms of NBFC

CCP604(B). 65 to 66 8
Quiz:

1. Minimum capital requirement of NBFC is

raised from present level of Rs.25 lakhs to

c) 3 crores
d) 5 crores
e) 2 crores
f) 1 crores

CCP604(B). 65 to 66 9
Quiz
2. Income recognition on NPA is allowed
on ____________________.

c) Cash basis only

d) Credit basis only
e) Loan basis only
f) None of the above

CCP604(B). 65 to 66 10
Quiz

3.NBFCs should follow the accounting

standards issued by the

c) Reserve Bank of India

d) Institute of Chartered Accounts of India
e) Board of Directors
f) None of the above

CCP604(B). 65 to 66 11
Quiz

4. The restrictive norm of NBFC is: Loans

against own shares not allowed

c. True
d. False

CCP604(B). 65 to 66 12
Frequently Asked Questions

1. Explain the prudential norms of NBFCs

CCP604(B). 65 to 66 13